Incidents:
The company released its 2023 annual report. In 2023, it achieved revenue of 40.341 billion yuan, an increase of 2.51% year on year; net profit to mother of 9.607 billion yuan, up 9.00% year on year; net profit after deduction of 9.748 billion yuan, up 16.81% year on year. The fourth quarter achieved revenue of 10.799 billion yuan, down 1.47% year on year, net profit to mother of 1,530 billion yuan, up 6.58% year on year, and net profit after deducting net profit of 2,038 billion yuan, up 0.50% year on year.
Integrated platform ensures collaborative development of multiple businesses
The company is forward-looking to build a one-stop service platform, develop various businesses collaboratively, and continue to empower customers. In 2023, the company ① chemical business achieved revenue of 29.171 billion yuan, up 1.12% year on year, excluding specific commercial production projects; ② Driven by business such as safety assessment and SMO, the testing business achieved revenue of 6.540 billion yuan, up 14.36% year on year; ③ biology business achieved revenue of 2,553 billion yuan, up 3.13% year on year, of which revenue related to new molecules increased 26% year on year; ④ CGT CTDMO business achieved revenue of 1,310 billion yuan, up 0.12% year on year; ⑤ Domestic New Drug Research and Development Service Department Achieved revenue of 726 million yuan, a year-on-year decrease of 25.08%.
The release of new production capacity and new business layout are expected to drive continued growth in performance
The company continues to promote global production capacity construction and new business layout. In 2023, 55,000m2 of new facilities in Suzhou and Qidong were put into operation, including 20,000 m2 GLP facilities; in January 2024, production capacity expansion projects were completed at the Changzhou and Taixing bases, and the volume of the peptide solid phase synthesis reactor increased to 32,000L. The company continues to strengthen its emerging business layout. In 2023, the TIDES business (mainly oligonucleotides and peptides) achieved revenue of 3.4 billion yuan, an increase of 64% year over year, and on-hand orders increased 226% year over year.
By the end of 2023, the number of TIDES business service customers reached 140, an increase of 36% over the previous year; the number of service molecules reached 267, an increase of 41% over the previous year.
Profit Forecasts, Valuations, and Ratings
Considering that the current industry boom is under slight pressure, we expect the company's revenue for 2024-2026 to be 404/457/52.3 billion yuan, with corresponding growth rates of 0.20%/13.04%/14.50%, respectively; net profit to mother is 97/112/13 billion yuan, corresponding growth rates are 1.38%/14.72%/16.77%, EPS is 3.32/3.81/4.45 yuan respectively, and 3-year CAGR is 10.74%. The company is a leading CXO enterprise with leading technical strength and project experience. The integrated business layout is comprehensive and can meet the diverse needs of customers. It is recommended to keep an eye on it.
Risk warning: geopolitical risks; increased industry competition; industry demand falls short of expectations; changes in drug approval policies; production capacity implementation falls short of expectations.